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tyres

Close The Mayfair Tax Loophole

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Exposed: the government has rubber-stamped a legal loophole that allows millionaire finance bosses to pay a lower rate of tax than many nurses and teachers. It's losing us up to £700 million a year - and 38 Degrees members are exposing the scandal with an explosive people-powered report.

In a few weeks, George Osborne will be delivering his last Budget before the election. A huge people-powered petition now will send him a clear message: if you want us to take you seriously, close this Mayfair loophole. Add your name to the petition now::

https://secure.38degrees.org.uk/page/s/close-the-mayfair-tax-loophole#petition

Tax%20monopoly%20petition%20image.jpg

Edited by tyres

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http://www.independent.co.uk/news/uk/politics/private-equity-bosses-using-700m-tax-loophole--and-donating-to-the-tories-10054911.html

The so-called “Mayfair tax loophole”, named after the exclusive London district where many private-equity firms are based, excuses the executives from paying higher-rate income tax on the often huge profits made by their investment funds.

The profits, known as “carried interest”, are treated as gains from their own personal investments and are thus taxed at the capital gains tax rate of 28 per cent. Some executives are able to minimise their tax bill still further – to a rate of just 10 per cent – by taking advantage of a tax break designed to help entrepreneurs.

The campaigners argue that since the money wagered on private-equity deals largely comes from outside investors rather than the executives themselves, the profits should be subject to higher tax rates of income tax, currently set at 40 or 45 per cent.'

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So what is the Mayfair loophole? Skimmed the first page and it doesn't say.

Campaigners have called on Chancellor George Osborne to use his final Budget of this Parliament to close a tax loophole for private equity firms which they estimate is costing the taxpayer up to £700 million a year.

The arrangement - dubbed the "Mayfair tax loophole" by campaign group 38 Degrees - allows millionaire fund managers to pay tax on much of their income at 28%, and sometimes even 10%, rather than the 45% top rate of income tax.

This gives them a lower tax rate than many middle-income earners, including some teachers or nurses, said the group.

https://uk.news.yahoo.com/osborne-urged-close-tax-loophole-001510193.html#UWFgZip

Edited by tyres

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http://

www.independent.co.uk/news/uk/politics/private-equity-bosses-using-700m-tax-loophole--and-donating-to-the-tories-10054911.html

Today’s research, funded by donations from more than 5,900 members of 38 Degrees, used figures from private-equity income surveys to estimate that the Mayfair loophole costs the exchequer between £280m and £700m each year.

Mike Lewis, the tax expert who wrote the report, told The Independent: “We’re just talking about ending a special tax deal that allows millionaire fund managers to shrink their own personal tax bills. There’s no reason why this should affect the private-equity industry’s success or investments.”

....

The Mayfair loophole

The so-called Mayfair tax loophole allows private equity executives to pay relatively low tax on the profits their investment funds make from buying and selling companies.

This is achieved by classifying this profit (known as “carried interest”) as capital gains – as if it had been produced by investing their own personal capital – rather than salaried income.

While their salaries and bonuses are subject to normal income tax rules, the carried interest – which in some cases makes up the majority of the executives’ pay packets – is subject only to capital gains tax at 28 per cent, instead of income tax at 40 per cent or 45 per cent.

The special arrangement is guaranteed by a memorandum of understanding negotiated outside Parliament between HMRC and the private equity industry’s umbrella group, the British Venture Capital Association.

.....

Edited by billybong

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Why is capital gains taxed at a different rate from earned income?

Which is precisely why the petition misses the point. Fix the tax system and obscure loopholes just disappear!

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